Charge against auction purchaser fails where property is bought for value without actual or constructive notice.

A statutory charge for sales tax arrears under the Tamil Nadu General Sales Tax Act was held unenforceable against an auction purchaser who bought for value without actual or constructive notice. Applying section 100 of the Transfer of Property Act, the Court stated that a charge cannot defeat a transferee for consideration without notice unless the special law clearly excludes that protection. On the facts, the auction disclosed no arrears, the sale consideration was paid, the sale was confirmed, and no material showed notice of the charge. The property was therefore treated as passing free of the charge, and the encumbrance proceedings were set aside.

---

---

Issues: Whether a statutory charge for sales tax arrears under the Tamil Nadu General Sales Tax Act, 1959 could be enforced against an auction purchaser who acquired the property for valuable consideration without actual or constructive notice of the charge.

Analysis: The governing principle was drawn from section 100 of the Transfer of Property Act, 1882, under which a charge cannot be enforced against a transferee for consideration without notice unless the special law expressly displaces that protection. The Court relied on the settled position that constructive notice is not to be presumed automatically and must be shown on facts. Since the auction sale disclosed no sales tax arrears, the appellants paid the sale consideration, the sale was confirmed in their favour, and no material showed actual or constructive notice of the charge, the property was treated as having passed free of the charge. The alternative contention regarding priority over the bank's mortgage was left open.

Conclusion: The statutory charge was not enforceable against the appellants, who were transferees for value without notice, and the encumbrance proceedings were liable to be set aside.

Final Conclusion: The writ appeal succeeded and the auction purchasers obtained protection against recovery of the defaulting dealer's sales tax dues from the property purchased by them.

Ratio Decidendi: In the absence of an express statutory exclusion, a charge under revenue law cannot be enforced against a transferee for consideration who took the property without actual or constructive notice of the charge.

---